Exhibit 10.2
Performance Share
3-Yr Vest
REYNOLDS AMERICAN INC.
LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE AGREEMENT
DATE OF GRANT: MARCH 2, 2005
W I T N E S S E T H:
1.
Grant . Pursuant to the provisions of the Reynolds American
Inc. Long-Term Incentive Plan (the “Plan”), Reynolds
American Inc. (the “Company”) on the date set forth
above has granted to
«FirstName» «LastName» (the
“Grantee”),
subject to the terms and
conditions which follow and the terms and conditions of the Plan, a
grant of
«Number» Performance
Shares.
A copy of the Plan is attached
and made a part of this Agreement with the same effect as if set
forth in the Agreement itself. All capitalized terms used below
shall have the meaning set forth in the Plan, unless otherwise
defined in this Agreement.
2.
Valuation of Performance Shares . Each Performance Share
shall be equal in value to one share of Common Stock.
3.
Vesting. (a) Subject to the terms and conditions of
this Agreement, the Performance Shares shall vest on March 2,
2008. For the Performance Shares to vest, the Company must pay to
its shareholders a dividend of at least $.95 per share in each
fiscal quarter during the period commencing on the Date of Grant
and ending on December 31, 2007 (the “Threshold
Requirement”), unless the Company’s Board of Directors
specifically approves the noncancellation of the Performance Shares
upon the declaration of a quarterly dividend of less than $.95 per
share. In the event the Company fails to pay its shareholders a
dividend of at least $.95 per share in any fiscal quarter during
the period from the Date of Grant and ending on December 31,
2007, and the Company’s Board of Directors does not approve
the noncancellation of the Performance Shares, the Performance
Shares shall be cancelled.
(b) Notwithstanding
anything in Section 3(a) of this Agreement to the
contrary,
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in the event of (i) the
Grantee’s death, (ii) the Grantee’s Permanent
Disability (as such term is defined in the Company’s
Long-Term Disability Plan), or (iii) a Change of Control, 100%
of the Performance Shares not previously cancelled due to the
Company’s failure to meet the Threshold Requirement, shall
vest.
(c) Notwithstanding
anything in Section 3(a) of this Agreement to the contrary, in the
event of (i) the Grantee’s involuntary Termination of
Employment without Cause (as such terms are defined in
Section 4 of this Agreement), or (ii) the Grantee’s
Retirement (as such term is defined below), the number of
Performance Shares that will vest, if not previously cancelled due
to the Company’s failure to meet the Threshold Requirement,
shall be equal to the product of (x) the original number of
Performance Shares granted to the Grantee under this Agreement and
(y) a fraction, the numerator of which shall be the number of
whole or partial months between the Date of Grant and the date of
the Grantee’s Termination of Employment, and the denominator
of which shall be 36. For purposes of this Agreement, the term
“Retirement” shall mean an employee’s voluntary
Termination of Employment on or after his or her 65
th birthday, or on or after his or her 55
th birthday with 10 or more years of service with
the Company or a subsidiary of the Company.
(d) Notwithstanding
anything in Section 3(a) of this Agreement to the contrary, in the
event of the Grantee’s voluntary Termination of Employment
(other than at Retirement) or Termination of Employment for Cause
(as such terms are defined in Section 4 of this Agreement),
the Performance Shares shall be cancelled.
4.
Termination of Employment. (a) For purposes of this
Agreement, the term “Termination of Employment” shall
mean termination from active employment with the Company or a
subsidiary of the Company; it does not mean the termination of pay
and benefits at the end of a period of salary continuation (or
other form of severance pay or pay in lieu of salary).
(b) For
purposes of this Agreement, if the Grantee has an employment or
severance agreement, employment shall be deemed to have been
terminated for “Cause” only as such term is defined in
the employment or severance agreement. For purposes of this
Agreement, if the Grantee does not have an employment or severance
agreement that defines the term “Cause,” the
Grantee’s employment shall be deemed to have been terminated
for “Cause” if the Termination of Employment results
from the Grantee’s: (i) criminal conduct;
(ii) deliberate and continual refusal to perform employment
duties on substantially a full time basis; (iii) deliberate
and continual refusal to act in accordance with any specific lawful
instructions of an authorized officer or employee more senior than
the Grantee or a majority of the Board of Directors of the Company;
or (iv) deliberate misconduct which could be materially
damaging to the Company or any of its business operations without a
reasonable good faith belief by the Grantee that such conduct was
in the best interests of the Company. A Termination of Employment
shall not be deemed for Cause hereunder unless the chief human
resources officer of the Company shall confirm that any such
Termination of Employment is for Cause; provided ,
however , that the chief executive officer of the Company
shall be required to confirm that a Termination of Employment of
the chief human resources officer of the Company is for Cause. Any
voluntary Termination of Employment by the Grantee in anticipation
of an involuntary Termination of Employment for Cause shall be
deemed to be a Termination of Employment for Cause.
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5.
Dividends. As of the date any dividend is paid to
shareholders of Common Stock, the Grantee shall be paid an amount
equal to the product of (a) the number of Performance Shares
held by the Grantee that have not yet been cancelled pursuant to
Section 3 of this Agreement, and (b) the dividend per
share of Common Stock paid to shareholders of Common Stock on such
date. In the case of dividends paid in property, the dividend shall
be deemed to be the fair market value of the property at the time
of distribution of the dividend, as determined by the
Committee.
6.
Payment. (a) Except as otherwise provided by this
Agreement, payment of vested Performance Shares shall be made only
in cash as soon as practicable following the date of vesting, and
in any event, no later than the March 15 after the end of the
year in which the payment of Performance Shares vests. The
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